2009 - %3, March

Millions Of Americans Travel Abroad For Health Care

| Tue Mar. 31, 2009 1:38 PM EDT

Remember when we were the gold standard? Now, there's an entire niche industry springing up to help Americans get good health care they can afford.

From CNN:

Sandra Giustina is a 61-year-old uninsured American. For three years she saved her money in hopes of affording heart surgery to correct her atrial fibrillation. "They [US hospitals] told me it would be about $175,000, and there was just no way could I come up with that," Giustina said.
So, with a little digging online, she found several high quality hospitals vying for her business.... Within a month, she was on a plane from her home in Las Vegas, Nevada, to New Delhi, India. Surgeons at Max Hospital fixed her heart for "under $10,000 total, including travel."
How do they do it? With wacky ideas like these one: "Max neurosurgeon Dr. Ajaya Jha said the hospital can provide high-quality care at low prices because the staff work hard to cut waste. 
"I've seen hospitals in the US where they open up something costing $10,000 and say, 'Oh it's not working. OK, give me another one.' We would never do that here. Even for 100 rupees (about $2) -- we would say, "Do we need to open this suture? Do we need to open this gauze?' We are very conscious of cost."
The salary of a US surgeon is five times that of a surgeon in India. "We [surgeons in India] want to make a profit, but we don't want to profiteer. We don't want squeeze people and I think American industries should also think that way," Jha said.

Profit, not profiteering. What a concept.

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Keeping Banks Small

| Tue Mar. 31, 2009 1:19 PM EDT
Given all the problems caused by banks too big to fail, should we just put a cap on bank size and be done with it?  Rortybomb says big banks don't charge lower interest rates, Steve Waldman says big bank size is a proxy for a lot of other problems, and Felix Salmon agrees with all of the above even if it's true that "there are no good and politically-feasible answers" for putting American banks on a diet.

But let's say this is all true, and that somehow it did become politically feasible to cap bank size.  What would be the result?  What follows is a little scattered, but maybe some other people who understand the industry better than me can pick it up where I leave off and provide some better analysis.

Felix suggests a cap of $300 billion in assets.  Fine.  But a cap on assets necessarily implies a cap on liabilities, and that means deposits are effectively capped too.  Let's call the deposit cap $200 billion in round numbers.  That means the end of nationwide banking since no bank that size can serve the entire country, but maybe you're OK with that.  A small price to pay etc. etc.

So here's what I wonder: what happens when you have a whole bunch of banks all operating at their maximum allowed size?  Do they keep taking in money but just sitting on it?  Of course not.  Do they essentially shut down, not taking any new customers?  What about natural growth among existing depositors?  (For that matter, what about natural asset growth?)

Even more important, what happens when banks can't compete with each other by growing?  What would they compete on?  My guess is that they'd compete on keeping the biggest, most profitable customers and would pretty much lose interest in smaller customers.  So small depositors would find themselves increasingly unwelcome, paying higher fees and penalties, having a harder time securing loans, and so forth.  After all, what incentive would a capped bank have to treat small depositors decently if they don't really want them in the first place?

Now, it might be that none of this would be a problem.  Capped banks would still compete with other capped banks to some extent, and unhappy customers could presumably still leave for smaller banks, who would compete for their business.  This is where I'd be interested in hearing from more knowledgeable people.  If you game this out, what does the industry end up looking like?  A regulated electric company that's effectively limited by the size of its service area?  A monopoly cable company?  A bunch of networks of loosely affiliated midsize banks?  Or what?  Anybody have a good idea?

Obama White House Close to Settling Missing Emails Case

| Tue Mar. 31, 2009 12:37 PM EDT

The long saga of the missing White House emails may be finally nearing its end. The Obama administration and two nonprofits that are suing it over millions of missing Bush-era emails have called a truce. A joint motion (PDF) and proposed order (PDF) filed by Justice Department lawyers and the plaintiffs, the National Security Archive and Citizens for Responsibility and Ethics in Washington (CREW), call for an indefinite stay of the case so the two sides can continue settlement negotiations. Both the White House and the nonprofits will have to withdraw their pending motions (including a White House motion to dismiss the case) and update the court on settlement proceedings in three months. But the whole ordeal could be over well before that—if contentious issues are resolved in the next few days or weeks.

"We just got a stay from the judge to give us some room to try to work things out," says Meredith Fuchs, the general counsel for the National Security Archive. "It will take a while before we know whether our talks are successful because our ability to resolve the case depends on nailing down lots of details: what happened, was it fixed, and will it happen again."

The National Security Archive and CREW have been pushing the White House to disclose information about millions of missing emails for years. The case began in 2007, after the Bush administration warned that it may have lost millions of emails that should have been archived under federal record-keeping laws. That brought the lawsuit to force the recovery of the emails and the adoption of a better archiving system. Bush administration lawyers fought the plaintiffs tooth and nail, successfully passing the buck to the next administration and keeping secret the details of how and why the emails were lost. In January, the Obama administration became the defendant in the case, and at first showed signs of continuing the Bush administration's legal strategy, filing a motion to dismiss the case the day after the new team took office. It's unclear what the Obama White House is now offering. But, no doubt, its more than what the Bush administration ever put on the table.

Pentagon Bloat Continues Apace

| Tue Mar. 31, 2009 12:22 PM EDT
As Nick Baumann has reported here and here, Defense Secretary Robert Gates is in the midst revamping the Pentagon's defense acquisitions programs, preparing to kill those that have been draining the most funds from government coffers, such as the the F-22 fighter and the Zumwalt-class destroyer. If you need more evidence that there's a problem, see the GAO's seventh-annual report (.pdf) on cost overruns in selected Pentagon weapons systems. The government auditor found that the number of major defense spending programs has grown from 77 to 96 since the beginning of the Iraq War. Not surprisingly, costs have continued on their upward march from $1.2 trillion to $1.6 trillion over the same period, with R&D costs now an average of 42 percent over budget. More programs, more money, and, yes, more delays. Initial delivery on DOD program investments now averages 22 months. The reason for much of this is that our military seldom looks before it leaps: the services routinely budget big-ticket projects before the basic technology is in place, meaning that development is routinely delayed as technological hurdles emerge. From the GAO:
A majority of the programs GAO assessed were unable to fill all authorized program office positions, resulting in increased workloads, a reliance on support contractors, and less personnel to conduct oversight. In December 2008, DOD revised its policy for major defense acquisition programs to place more emphasis on acquiring knowledge about requirements, technology, and design before programs start and maintaining discipline once they begin. The policy recommends holding early systems engineering reviews; includes a requirement for early prototyping; and establishes review boards to monitor requirements changes--all positive steps. Some programs we assessed have begun implementing these changes.

Our Century's Hoover

| Tue Mar. 31, 2009 12:15 PM EDT
Back when my mother was a girl, the house would be silenced whenever "Mr. Hoover" gave a speech on the radio.  Which he did.  Often.  Sure, he had been repudiated at the polls by historic margins, but he was bitter and angry over FDR's policies and insisted on making sure everyone knew it for years and years after his defeat.

Well, I guess every generation needs its own Hoover.  It looks like John McCain is ours.

Welcome, Fox Nation!

| Tue Mar. 31, 2009 12:11 PM EDT

Have you checked it out yet? Fox is going to the Internets with an aggregator site that will try to lure conservative HuffPo-types (the homepage is similar even). Their top stories right now feature a picture of Spicoli (the only Sean Penn Bill O'Reilly likes), and  instead of an About Us page (because that phrase would be too Democratic?) they offer Our Purpose instead:

The Fox Nation was created for people who believe in the United States of America and its ideals, as expressed in the Constitution, the Declaration of Independence, and the Emancipation Proclamation. It is a community that believes in the American Dream: Life, liberty, and the pursuit of happiness. One that believes being an American is an honor, as well as a great responsibility—and a wonderful adventure.
This is a place for people who believe we live in a great country, a welcoming refuge for legal immigrants who want to contribute their talent and abilities to make our way of life even greater. We believe we should enjoy the company and support of each other, delighting in the creativity, ingenuity, and work ethic of one and all, while observing the basic rules of civility and mutual respect and, most importantly, strengthening our diverse society by striving for unity.
The Fox Nation is for those committed to the core principles of tolerance, open debate, civil discourse--and fair and balanced coverage of the news. It is for those opposed to intolerance, excessive government control of our lives, and attempts to monopolize opinion or suppress freedom of thought, expression, and worship. We invite all Americans who share these values to join us here at Fox Nation.

Why is it that the language of the right feels like a history textbook? And liberals don't believe in the American Dream, the Emancipation Proclamation? Plus, they go all Spider-Man on us with the great honor and great responsibility business. These tenets feel basic, it's the nuance where we disagree, the policies that make for a "great country." But never mind nuance, I'm still stuck on the "basic rules of civility" part, not exactly a guiding principle at Fox News.

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Has the Economy Bottomed?

| Tue Mar. 31, 2009 11:32 AM EDT
Atrios thinks any optimism about the economy is misplaced.  Homes prices are continuing to fall, plus this:

There's still a big wave of ARM resets* coming, and the CRE implosion has just begun.

*Regarding ARM resets, some suggest this won't be a problem because interests rates are so low. But the issue is option ARMS ("pick a payment!") loans, where people have been making interest-only or even neg-am payments on the loans.

For what it's worth (about what you're paying for it, I'd say), I agree. Home prices probably have another 9-12 months left to fall, commercial real estate is imploding, rising savings rates are going to continue to depress consumption, and beyond that there's the rest of the world to think about too.  Eastern Europe looks set to collapse sometime later this year, and if/when that happens it's going to have a huge impact on western European banks.  Plus there's hedge funds.  So far they've weathered the storm fairly well, all things considered, but I keep waiting for the other shoe to drop on that score.

Anyway, that's all pretty discouraging stuff.  Hopefully we're both wrong and things are going to start picking up this summer.  But I'm afraid I doubt it.

News Flash: Americans (Still) Love Obama

| Tue Mar. 31, 2009 10:36 AM EDT

I've long believed that there is a fundamental disconnect between Washington's pundit class and the American people as a whole. It's not a fault of the pundits' -- their life and work experiences don't put them in touch with anyone from roughly 45 of the 50 American states, and those people that they do meet tend to work in a small set of professions and industries. (Their only sin is not acknowledging the limits of their expertise and predictive abilities.) It is because of that disconnect that you can have TV commentators, journalists, and bloggers debating whether Obama's honeymoon is over when numbers like this suggest it is not a question open for debate:

The percentage of Americans in the new poll who said the country is on the right track still stands at just 42 percent, but that is the highest percentage saying so in five years and marks a sharp turnabout from last fall, when as many as nine in 10 said the country was heading in the wrong direction....

Overall perceptions about the country parallel a rapid increase in the percentage of Americans who say the economy is improving. For the first time since late 2004, the gap between the numbers saying the economy is getting better and those saying it's getting worse is in the single digits (27 percent to 36 percent).

Two-thirds of Americans approve of the way Obama is handling the country's top job, and six in 10 give him good marks on issue No. 1, the flagging economy.

And this suggests that Democrats, independents, and likely some moderate Republicans reject the GOP's back-to-the-future "tax and spend" trope:

At the same time, 62 percent see Obama as a "new-style," fiscally responsible Democrat; fewer, about a third, label him an "old-style" Democrat oriented toward taxing and spending.

Time to get some new rhetoric, Karl Rove.

Public Service Announcement

| Tue Mar. 31, 2009 1:51 AM EDT
I'm home, but it's too late to do anything except plow through a weekend's worth of email right now.  Normal blogging will resume Tuesday.

In the meantime, though, a reminder: I like comments!  The more the better.  And if you want to comment hassle free, it's easy: at the top right of the screen click on "Sign In," choose "Create New Account" and then enter your name and email address.  You can use either a handle or your real name, whichever you like.  Your email won't be displayed, and we won't use it send you spam or anything.  That's it!  It takes 30 seconds, and after a few minutes you'll get a confirmation email.  Click the link, choose a password for your account, and you're done.

You can also personalize your account if you want to, but that's optional.  If all you want to do is comment, just choose a name and password and you can comment away without ever having to encounter the annoying captcha prompt again.

Easy Fixes: Fish Oil Curtails Cow Farts

| Mon Mar. 30, 2009 7:21 PM EDT
Adding 2-percent fish oil in the diet of cattle reduces the amount of methane emissions out their back ends. The benefits of omega-3 fatty acids are legendary and probably inflated but in this case the effect seems positively deflationary.

According to Lorraine Lillis, speaking at the Society for General Microbiology in the UK: "The fish oil affects the methane-producing bacteria in the rumen part of the cow's gut, leading to reduced emissions. Understanding which microbial species are particularly influenced by changes in diet and relating them to methane production could bring about a more targeted approach to reducing methane emissions in animals."

Target away, Doctor Lillis.

Cattle, sheep, and goats fart and burp about 900 billion tons of methane a year, more than a third of total global emissions. The problem comes from the methanogen bacteria inside the guts of ruminants. These helpful bacteria enable cows and the like to digest what is essentially indigestible (cellulose). But in the process they off-gas all that methane, which is 20 times more powerful by volume than carbon dioxide at trapping solar energy.

We could attempt to cap the number of flatulent ruminants in farm production as a means to cool global warming. This approach offers many fresh benefits—especially since meat and dairy are so insanely energy intensive, even without the farting. But if reduction never happens, we could still lower methane emissions via fish oil.

Or, better yet, flaxseed oil... can Doctor Lillis look into its omega-3 powers? If flaxseed works, then we don't have to rape the seas to feed the cows who eat the grain grown with fossil-fuel technologies only to fart the methane just so we can eat the cows and fart the methane from our meat-clogged digestive tracts... then maybe  we'll all live happily ever after.

(Burp.)